Small Business Employee Benefits and HR Blog

Your Personal Guide to Employer Reimbursement for Health Insurance

There’s a lot of buzz surrounding health insurance reimbursement (such as Health Reimbursement Plans) for employees nowadays -- many small business owners are wondering how to offer it and if it’s compliant. But, when it comes down to it, reimbursing your employees for health insurance is easier to do than you think.

We’ve broken down some of the main topics you need to know in order to get a good grasp on reimbursing your employees for their health insurance.

A Simple Explanation of How Employer Reimbursement for Health Insurance Works

Health insurance can be complicated, but it doesn’t have to be. You can reimburse your employees for individual health insurance even without a complicated knowledge of the subject. In fact, when using Healthcare Reimbursement Software, you simply decide how much you want to contribute each month to your employees’ individual health insurance premiums and the software takes care of the rest.

Reimbursing your employees for individual health insurance is pretty simple, but is it compliant? If a Section 105 plan is set up and administered it is compliant to reimburse your employees for individual health insurance.

How? Under current code and regulations, employers are allowed to use a limited purpose Section 105 medical reimbursement plan (such as a Healthcare Reimbursement Plan) to reimburse employees for individual health insurance premiums. This is similar to the way employers contribute to group premiums.

How Can an Employer Reimburse Employees for Individual Health Insurance?

Knowing you can compliantly reimburse your employees for their individual health insurance premiums through a plan such as a Healthcare Reimbursement Plan (HRP), how is it done?

Step 1 - The employer decides who will administer the HRP (ex: Administration Software Provider, a third-party administrator, or self-administer).

Step 6 - If the request is approved, the employer reimburses the employee for the approved reimbursement, up to the balance of each employee's HRP.

Tip: In order to remain compliant and evade costly mistakes, it’s best to utilize a Healthcare Reimbursement Software company. This takes the guesswork out of reimbursing your employees and takes the work off your shoulders.

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Disclaimer: The information provided on this website is general in nature and does not apply to any specific U.S. state except where noted. Health insurance regulations differ in each state. See a licensed agent for detailed information on your state. PeopleKeep, Inc., does not sell health insurance.